1 Why the pound’s fall matters (Kamal Ahmed on BBC) There
are three broad reasons for the sickly state of the pound, which fell again on
Tuesday by a precipitate 0.9%. First, and fundamentally, it is a market judgment
on the future growth potential of the UK economy relative to the future growth
potential of competitor economies, and their currencies.
If it is judged that the value of UK assets will
grow less quickly in the future - and most economists have downgraded growth
next year following the Brexit vote - then investors will discount those
assets, sell sterling and buy more favourable currencies such as the dollar.
Second, this downward trajectory is then emphasised
by near-term market makers who "short" the currency, making a profit
margin on the pound's decline. Everyone becomes a little more nervous and the
market for sterling becomes a little more sickly.
Third, differential interest rate expectations drive
currency moves. In Britain, the Bank of England has made it clear it expects to
engage in more monetary loosening before the end of the year.
Does that mean investors are becoming wary of
lending to a country with a weakening currency and a government which has
signalled a possible fiscal loosening driven by more borrowing? Not yet, is the
answer to that question. At the moment, investors are very willing to extend
rock-bottom borrowing facilities to the government as the fundamentals of the
economy are strong.
Why does the fall of the pound matter? On the
upside, it matters for exporters which are boosted as their goods are far
cheaper on foreign markets. It matters for multinational companies like
pharmaceutical firms which earn much of their income in dollars. It matters for
the tourism industry in the UK, as foreign visitors flock here for bargains and
good value holidays.
On the downside, it matters for tourists travelling
abroad who will find everything they buy much more expensive. It matters for
the food and fuel UK imports as it becomes more expensive. It matters for
inflation, as the rise in import costs feeds through to businesses and the High
Street.
And remember, it does not need much of a rise in
inflation to wipe out real income growth which at present is running at around
2%. And if real incomes start falling, that is when the fall in sterling becomes
a truly political issue.
2 Muslim youth expect more (Abdul Basit in Khaleej
Times) Governments are not doing enough to address the needs of Islamic youth,
according to around 50 per cent of the delegates who attended the first session
of the Global Islamic Economy Summit 2016 in Dubai.
When asked if they were optimistic that governments
in the region were appropriately addressing the needs of their youth, 50 per
cent of delegates said they were not, 42 per cent said they were, with eight
per cent being undecided.
Addressing the issue of rapid population growth -
the youth segment of the world's 1.7 billion Muslims are growing at twice the
global average - panellist Ali Al Nuaimi, a senior nuclear professional, said
that while some governments see this as a challenge, others see it as an
opportunity.
He highlighted the appointment of a Minister of
State for Youth Affairs in February as a concrete example of the UAE striving
to give voice to the youth. Al Nuaimi said the future could not be about
creating more public sector jobs. "That's not empowerment," he said.
"We're focusing on creating an environment where youth can thrive and
fulfil their potential."
He added that an increased focus on entrepreneurship
could be the answer: "Less than three per cent of youth here are
entrepreneurs. This is a country of 200 nationalities, people come here from
all over the world to start their own businesses. Our youth should be leading
this movement and not falling behind."
3 Eight technologies to keep an eye on (Jon Card in
The Guardian) Here are eight key areas that all businesses should pay attention
to. A. Artificial intelligence. The AI market is growing rapidly and forecast
to be worth $36bn by 2025. Prof Michael Feindt, a former Cern scientist and now
chief scientific officer at predictive applications company Blue Yonder, says
machines can learn from past experience better than humans can and are very
effective at making unbiased predictions.
B. Augmented reality. AR and its better known cousin
virtual reality (VR) are coming to the fore and revenues from these industries
are forecast to reach $120bn by 2020. But PwC innovation consultant Jeremy
Dalton, says there are clear differences – VR is an “immersive experience”
whereas AR provides the ability to place a virtual image into a real
environment.
C. Blockchain. It is best known as the ledger that
records all bitcoin transactions. But entrepreneurs have spotted there are many
uses of blockchain or distributed ledger technology (DLT) and investment is
pouring in. D. Drones. Dr Kevin Curran, senior member of the Institute of
Electrical and Electronics Engineers, predicts supermarket deliveries, aerial
photography, advertising at public events and security/surveillance will all
make use of drones soon.
E. Internet of Things (IoT). Researchers at Gartner
estimate there will be 6.4bn “things” connected to the internet by the end of
2016. Heidi O’Leary, principal consultant at Market Gravity, says she expects
to see big growth in “smart home” technology such as smart thermostats,
connecting lights and security systems, as well as wearables such as smart
watches, fitness and payment devices.
F. Robots. Experts say the global robotics and
automated devices market is now entering a smarter phase and will be worth a
predicted $226bn by 2021. Graham Mackrell, managing director of Harmonic Drive
UK, which has created parts for Nasa missions to Mars, says collaborative
robots (cobots), which can “mimic and learn” tasks from humans, are set to
revolutionise workplaces.
G. Virtual reality. Dr Wendy Powell, lecturer in VR
at the University of Portsmouth, says the affordability of VR now makes it
within reach of even the smallest of businesses. “It offers a huge range of
opportunities for business, from product visualisation to virtual tours,
training employees in safety-critical processes, even improving health and
wellbeing of staff and customers,” she says.
H.3D printing. Prof Hari Mann of Ashridge Executive
Education predicts the 3D printing market will revolutionise manufacturing as a
whole, enabling the creation of affordable, bespoke products produced locally.
The sector is estimated to be worth more than $30bn by 2022.
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